Indonesian Stocks Hit 16-Month High

The Indonesian stock market reached a 16-month high on Wednesday, with buying sentiment boosted by gains on Wall Street and credit ratings increases for Indonesia, analysts said.

Moody’s Investors Services on Wednesday said in a statement it had lifted the country’s local and foreign-currency ratings one level to Ba2 — highest level in 11 years — citing the economy’s resilience to the global recession.

Frederik Daniel Tanggela, an analyst at PT Sucorinvest Central Gani, said the increase in the country’s credit rating had spurred capital inflow into Indonesia’s financial instruments because the country’s risk premium would move lower.

Frederik said the risk premium had fallen to 2.67 percent from above 3 percent.

He said foreign investors preferred to invest in stocks with bigger market capitalizations and more liquidity, especially companies in the financial and infrastructure sectors because they remained undervalued.

Felix Natanael, a currency trader at PT Bank CIMB Niaga, said US Federal Reserve chairman Ben Bernanke’s statement on Tuesday that the recession was “likely over” also boosted sentiment. “We expect to see more foreign inflows into the stock market, which will support the rupiah,” he said.

On Wednesday, the rupiah rose about 2 percent to an 11-month high of 9,690 against the dollar as of the stock market’s close, compared with 9,890 at the same time on Tuesday.